A hedge fund that owns 11.3% of EnPro Industries Inc. wants EnPro to spend $150 million to buy back a quarter of its stock -- or to consider selling the company.

And Steel Partners II says it already offered $47 per share for EnPro in June. The hedge fund, owned by activist investor Warren Lichtenstein, has been a large investor in EnPro since 2003. It is the largest institutional owner of EnPro shares.

Steel Partners says it will run a slate of five candidates for the company's eight-member board if EnPro does not respond to its recommendations. That sets up the possibility of a proxy fight at EnPro's annual meeting this spring.

But in a statement Wednesday, EnPro said it will evaluate the options suggested by Lichtenstein's group. The company hasn't given a timetable for deciding whether to pursue those recommendations.

Steel Partners raised its concerns in a letter to EnPro last week. The letter came as the hedge fund was swiftly buying up shares of EnPro stock.

EnPro spokesman Don Washington says the company has kept in contact with Steel Partners as it would with any large investor. EnPro has been aware of Lichtenstein's concerns about the stock price, he says.

Lichtenstein praises EnPro's financial performance in his Jan. 30 letter. But he notes the company's stock price had dropped a third since its earnings announcement in November. He also says it's off 40% from a 52-week high of $46.46 in July.

He says investors are concerned that EnPro isn't making efficient use of its balance sheet -- not improving investor returns. He also cites Chief Executive Ernie Schaub's plans to retire this year as creating uncertainty.

"The status quo is not acceptable," Lichtenstein writes.

Last week, Davenport & Co. analyst Todd Vencil wrote that EnPro is undervalued. But he also said that following Steel Partners' recommendation "would significantly limit the company's ability to pursue its stated aim of growing ... through expansion and acquisition."

The proposed buyback would nearly double the company's debt -- now $180.7 million. But Vencil notes the company's debt is so low that the borrowing would leave it with a still-reasonable debt ratio.

At $47 per share, Steel Partners' offer would be worth about $1 billion. There are more than 21.6 million shares of EnPro stock available.

Lichtenstein expects high interest from buyers, should EnPro go up for sale. And he says his company would be interested.

Steel Partners has purchased almost 300,000 shares of the company since the end of the year. But its 11.3% share of the stock is not the most it has ever owned of EnPro. In advance of EnPro's annual meeting last year, Steel Partners worked its way up to owning 14.8% of the company -- more than 3.14 million shares.

Steel Partners did not make any public demands of EnPro at that time. A spokesman for Steel Partners did not return phone calls seeking comment.

After hitting its peak ownership in EnPro in February 2007, Steel partners began selling off its stock in the company. In June, it made its previously undisclosed offer to buy the company.

By September, its ownership was down to 8.4%. After that, Lichtenstein began to build up his holdings again.